Mario Draghi drew a line in the sand this weekend against a rising euro.

“A strengthening of the exchange rate requires further monetary stimulus. That is an important dimension for our price stability,” the European Central Bank president said at a news conference Saturday. The European currency bought $1.39 at that moment, up from $1.22 in July 2012.

These are striking words from a central banker, especially in the developed world. They usually shy away from drawing their currencies into monetary policy debates for fear of stoking currency wars with other finance officials.

These days, nobody seems to want a stronger currency. The U.S. has taken note that Chinese officials have actively sought to devalue their currency in recent weeks. A senior U.S. Treasury official whispered to reporters before the IMF meetings the developments “raise serious concerns” in the U.S..

Japan, trying to march out of decades of deflation, wants a weaker yen. Meanwhile in the U.S., where Fed officials have grown agitated about low inflation, import prices have been down from year-ago levels in 19 of the past 23 months. A stronger dollar would amplify that trend.

All of this points towards weak global demand and a continuation of the easy money policies that mark this post financial crisis era.

-By Jon Hilsenrath

MORNING MINUTES: KEY DEVELOPMENTS AROUND THE WORLD

ECB’s Draghi: Further Euro Strength Could Trigger More Easing. European Central Bank President Mario Draghi on Saturday ratcheted up his warnings about the strong euro, saying a further rise in the exchange rate would trigger additional monetary easing to keep inflation from falling too low. “A strengthening of the exchange rate requires further monetary stimulus. That is an important dimension for our price stability,” Mr. Draghi said at a news conference during meetings of the International Monetary Fund. Mr. Draghi’s comments are notable because central bankers typically shy away from commenting on exchange rates set by the financial markets. But he has highlighted in recent weeks the effect the strong euro has had on inflation, and has said it is an increasingly important factor on the ECB’s assessment of price trends. His comments Saturday went further than he has in the past by signaling a monetary policy response should the euro rise further, though he didn’t give a specific level that would trigger ECB action. http://on.wsj.com/Q1OLXl

ECB Officials Keep Focus on New Measures To Support Euro Zone. The euro crisis has receded, but European Central Bank officials were still out in force during meetings of the International Monetary Fund in Washington. The eyes of financial markets remain firmly fixed on the ECB because at a time when other central banks are weighing exit strategies, the ECB has talked openly about unveiling more stimulus. http://on.wsj.com/1kPGC62

ECB’s Nowotny: Additional ECB Easing Steps ‘Clearly Possible’.Fresh stimulus measures from the European Central Bank are “clearly possible” to guard against the risks of excessively low inflation, but the bank should wait until its June meeting to consider whether to take them, Austrian central bank governor Ewald Nowotny said in an interview with The Wall Street Journal. Mr. Nowotny, who is a member of the ECB’s governing council, signaled that his preference would be for any ECB stimulus to be geared toward Europe’s asset-backed securities market, which may in turn boost the flow of credit to the economy. http://on.wsj.com/1ewLgOj

ECB’s Coeure Says Asset Purchases May Be Appropriate Tool to Fight Too-Low Inflation. The European Central Bank may consider purchases of assets to hold down long-term interest rates, ECB executive board member Benoit Coeure said Sunday, the latest sign that officials are open to dramatic steps to keep inflation in the euro zone from staying too low for too long. http://on.wsj.com/1jDU2ONECB’s Coeure: The Stronger the Euro, the More Need for Monetary Accommodation. http://on.wsj.com/1hq5AWd

ECB’s Noyer: Weaker Euro Requires “Accommodating” Policy. A weaker euro is desirable and requires an “accommodating” monetary policy, European Central Bank governing council member Christian Noyer said Monday in an interview with French newspaper Le Figaro. http://bit.ly/OZPUNJ

Central Banks Say Regulations May Undermine Europe’s Economic Recovery Two of the world’s leading central banks took aim Friday at regulations they said could make it harder for small firms to access financing, thus undermining Europe’s economic recovery. In a six-page report, the European Central Bank and the Bank of England said they are concerned about the “shrinking” market for asset backed securities, or bundles of mortgage, small business and other loans that are packaged and sold to investors. http://on.wsj.com/1iBfL6O

Advanced Economy Officials Worry About Low Inflation. The world’s top finance officials stepped up their warnings about low inflation during weekend meetings of the International Monetary Fund, calling for action to combat downward price pressures that threaten consumption and stymie debt reduction. Much of the concern about too-low inflation centers on the euro zone, where annual inflation is just 0.5%. That is far below the European Central Bank’s target of just below 2%. Yet the ECB has been less aggressive than the U.S. Federal Reserve and other major central banks in rolling out programs to attack the problem. http://on.wsj.com/1qWq6OW

G-20 Leaders Worry Ukraine Crisis Could Lead to Economic Instability. Finance officials from the world’s 20 largest economies stood behind Ukraine Friday in a symbolic show of unity, despite an escalating geopolitical battle between Russia and Western members of the G-20 over the fate of the beleaguered Eastern European nation. In a joint statement after two days of talks, the G-20 expressed concerns about the potential for Ukraine’s crisis to drive economic instability, and backed an International Monetary Fund bailout designed to avert a collapse of Ukraine’s economy. “We are monitoring the economic situation in Ukraine, mindful of any risks to economic and financial stability, and welcome the IMF’s recent engagement with Ukraine as the authorities work to undertake meaningful reforms,” the G-20 said. http://on.wsj.com/1oUOp47

Fed’s Kocherlakota: Tax Cuts on Business Investments Could Boost Economy. A tax break for businesses that invest in research and development, new equipment and physical structures could be “an effective form of stimulus” for the U.S. economy, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said Saturday. “The future course of the U.S. economy is not predetermined by the events of the past seven years. Both history and theory have the same lesson: It is possible to undo what might now appear to be permanent changes,” Mr. Kocherlakota said in remarks prepared for delivery Saturday at a National Bureau of Economic Research conference in Cambridge, Mass. It is unusual for Fed officials to address a potential fiscal stimulus so directly. http://on.wsj.com/1hJYR4R

Fed’s Stein: Financial Stability Fits Within Central Bank’s Dual Mandate. The Federal Reserve doesn’t need to expand its focus from its dual mandate to take financial-stability concerns into account, Fed governor Jeremy Stein said Sunday. Mr. Stein, who has expressed worries that the Fed’s easy-money policies could spark instability across the financial system, said his “first instinct” would be not to add financial stability as some sort of separate task for the central bank to carry out. Approaching financial stability through the lens of the Fed’s dual mandate to achieve maximum employment and price stability “will give you a little bit of analytical discipline,” he said during a panel discussion at theInternational Monetary Fund’s spring meetings. http://on.wsj.com/1hyLk4U

Producer price what? Inflation Is Still Low, and the Fed Is Still Concerned. Pricing power remains weak for most businesses, a sign that demand in the U.S. economy lags available supply. That gap is a growing concern at the Federal Reserve. According to Friday’s producer price index report, producer prices for final demand goods and services were up just 1.4% in the year ended in March. The PPI for just goods was up 1.1%, and for services, 1.6%. After energy prices pumped up inflation in 2011, price increases at the production level have not shown much momentum. Except for one or two months, yearly price gains have stayed below 2%. Fed officials are growing concerned that inflation is too low. In an April 8 speech, Minneapolis Fed president Narayana Kocherlakota explained why the lack of pricing power is a problem: “Inflation is low compared to the Fed’s target when the demand for goods and services is too low to fully use the available resources in society. The low inflation in the United States tells us that resources are being wasted.” http://on.wsj.com/1lWiH4m

Mexico’s Carstens: A Successful Federal Reserve Would Help Emerging Markets. Mexico’s top central banker says he is not as concerned as some of his counterparts in other emerging economies about the prospect of a pullback in the Federal Reserve’s monetary support for the U.S. economy. “The attitude we take is that the Fed has to do what it has to do,” Bank of Mexico Governor Agustín Carstens said in an interview Saturday. “We all would be in a much better place if the Fed achieves its objectives,” he said, because it would mean a much stronger U.S. economy, “and that’s what matters the most for Mexico.” http://on.wsj.com/1jANG2P

Africa Ready for Fed Taper, Must Mind Buffers: ADB Chief Rapidly-expanding economies in sub-Saharan Africa can’t let large capital inflows distract them from needed investments in basic infrastructure and continued budget discipline, president of the African Development Bank, said Friday in an interview. Excluding the continent’s conflict-ridden North and other trouble spots, Africa’s so-called “frontier economies” are poised for strong growth of around 6.2% this year, in line with forecasts from the International Monetary Fund, Mr. Kaberuka predicted. That outlook is not threatened by the possibility that China’s economy, which has made deep investments in Africa’s infrastructure in recent years, could stumble later this year, as some forecasts suggest. “There is an underlying momentum in Africa that is not explained only by China. It is a momentum of its own which is related to the demographics mainly, an improved business environment … and greater international trade,” Mr. Kaberuka, who is from Rwanda, told The Wall Street Journal. http://on.wsj.com/1qIjm7q

There Are Benefits to Being Beholden, China’s Central Banker Says. Economists often argue that China’s central bank needs more independence so that it can make reliable monetary policy, free of political interference. But if you ask the man at the helm of the People’s Bank of China, things are fine just the way they are. http://on.wsj.com/1m1Mvwy

GRAPHIC CONTENT

Fewer Foreclosures Could Mean Fewer Homes for Sale. Housing analyst Ivy Zelman cut her forecast for existing home sales this year but says she’s still bullish about the U.S. housing recovery. In a report Friday, her firmZelman & Associates said it now expected a 5% drop in sales of previously owned homes for 2014 to a seasonally adjusted annual level of 4.8 million units. At the start of the year, the firm had forecast nearly a 6% gain from last year, to 5.4 million from last year’s 5.1 million units. The forecast calls for sales to increase modestly in 2015 and 2016, to 4.9 and 5 million units, respectively, down from earlier forecasts of 5.7 and 5.9 million units. http://on.wsj.com/1lRuaQd

Economists Count Cost of Scottish Opinion Polls. Scots go to the polls Sept. 18 to vote on whether to stay in the U.K. or go it alone as an independent state. Much ink has been spilled over how the new nation would fare economically. Less attention has been paid to whether the debate over independence is affecting the U.K. economy right now. A paper published by Costas Milas of the University of Liverpool and Tim Worrall of the University of Edinburgh takes a look at this second question. The two economists, one from an English university and one from a Scottish university, examined whether shifting support for Scottish independence is affecting U.K. borrowing costs. Their conclusion: increasing support for separation may indeed be putting pressure on yields, although they acknowledge the effect is small.

-India’s industrial output contracted 1.9% in February from a year earlier as manufacturing activity shrunk, suggesting that the south Asian economy is still stuck in a slowdown. It was the weakest reading in nine months and well below economists’ expectations of a 0.9% increase. http://on.wsj.com/1erKho8

-Higher food prices may have lifted India’s inflation rate last month, a poll of economists showed Friday. The wholesale price index, which has traditionally been used as the main measure of price rises in the country, likely rose 5.30% in March from a year earlier, according to a poll of 15 economists by The Wall Street Journal. http://on.wsj.com/PXFuze

-Ninety percent of Africans live in just 24 countries out of the continent’s 54. Half of Africa’s residents live in just seven countries.—African Development Bank President Donald Kaberuka

-U.K. house prices hit a fresh record high for a second straight month in April, fueled by a lack of property for sale at a time of healthy mortgage finance availability—a combination which threatens to keep pushing prices higher for some time to come. http://on.wsj.com/1eCTe8m

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